discussion7

There are two major categories of cost structure: cost-driven and value-driven structure. Cost driven structure focuses on keeping expenses and costs down. A value-driven structure, on the other hand, focuses on creating more value in the product. Green Drive Logistics Company will embrace a cost-driven structure. The company will use outsourcing and automation to keep costs low. We believe by keeping the costs down, we will gain a competitive advantage in terms of pricing like McDonald's and Walmart.

The company’s cost structure will have the following attributes: economies of scope, economies of scale, fixed costs, and variable costs. Economies of scope signify cost savings that the entity will enjoy as the scope of its operation grows (Belyh, 2015). Economies of scale, on the other hand, signify cost-saving that the entity will enjoy as it grows. Fixed costs are the costs that the company will incur despite the volume of the products/services. Variable costs, on the contrary, are the costs that vary relative to the volume of products/services produced.

Before deciding on the kind of cost structure that the company will embrace we considered the following aspects: the fundamental expenses derived from the business model, the key resources, and the key activities of the business model.

References

Belyh, A. (2015). Cost Structure Block in Business Model Canvas. Cleverism.